Graduate unemployment in South Africa: extent, nature and causes

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Abstract

The South African economy faces a challenging socio-economic problem of high and
persistent unemployment since the transition. Looking at the unemployment problem in greater perspective, numerous studies found that it is most serious amongst the youth. Since the beginning of the 2000s, a few studies focused particularly on youth and graduate unemployment, but there has been a lack of research in this area in recent years. Hence, this dissertation aims to fill some gap in the available research by investigating the extent, nature and causes of graduate unemployment in South Africa. This study firstly defined the relevant concepts and discussed some theories relevant to graduate unemployment, before reviewing the results of the past studies on the nature and extent of graduate unemployment. Thereafter, the possible causes were investigated, such as lack of experience, lack of soft skills, skills mismatch, poor quality of education of the graduates, discrimination by employers, etc. Graduate unemployment in India, China and Europe were also considered, and it was found that graduate unemployment was not in a unique problem in South Africa. The study proceeded with an analysis the Statistics South Africa 1995-2010 labour survey data and conducted more up-to-date statistical analyses of the profile of graduate unemployed. The results showed that the characteristics of unemployed graduates were, in general, the same as what was found by the previous studies, as graduate unemployed were more likely to be female and black, aged 15-34 years at the time of the survey, residing in Gauteng, with only post-Matric certificates or diplomas, and graduating from the fields of Business /Commerce / Management, and Education / Training / Development. The Oaxaca-Blinder decomposition was also applied, and the results indicated that employment discrimination against black graduates was very likely, after controlling for differences in demographic and educational attainment blacks and whites. Hence, the results of the empirical analysis showed that graduate unemployment persists. Finally, graduate employment elasticity coefficients and employment absorption rates were derived by educational attainment category, and the results showed that although graduate unemployment is clearly less serious than unemployment in other educational categories, the labour demand for graduates is not rapid enough to absorb all the graduates.